Among the biggest winners in Monday’s early trading are Amylin (Nasdaq: AMLN), Orexigen (Nasdaq: OREX) and PolyMet Minerals (AMEX: PLM).

Amylin Produces a Safe Profile

During the past few weeks, several biotech stocks that are focused on diabetes have been in the news as sharp gainers or losers. It’s no coincidence. This is the time of year when many of these firms update the clinical progress for their key drugs and devices, highlighting their respective efficacy and toxicity. Diabetes is already a large and growing problem in the United States, and as obesity rates spike in China, could soon become a global problem. Biotech firms, and their Big Pharma partners, see potential “blockbuster opportunity” in everything they pursue in this area.

Today’s winner: Amylin Pharmaceuticals (Nasdaq: AMLN), which issued a flurry of press releases over the weekend regarding its Byetta drug. This isn’t about a drug still in testing, but rather one that is already on the market, is seeing rising competition, and could have lost a lot of sales if ongoing testing showed that Byetta causes a spike in pancreatitis, a painful and dangerous condition in which the pancreas can shut down. Investors are giving a sigh of relief on Monday morning, as the company’s latest data show no adverse effects on the pancreas. Shares are up +2%.

But it’s a fiercely competitive market. A new entrant from Novo Nordisk (NYSE: NVO) has just launched, and quickly generated 20% market share in its first quarter on the market. In addition, Roche is testing its own diabetes drug, so market share battles could become fierce. Roche’s rival Taslo drug has seen some recent delays in its clinical approval process, which led investors to push up shares of Amylin over the last few weeks.

Action to Take –> This is a biotech segment with too many players and too many FDA questions, and is best left for investors that are deeply focused in this area.

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#-ad_banner-#Orexigen’s Strong Data

The treatment of alarmingly high national obesity rates is a clear precursor to tackling the rising tide of diabetes sufferers. Efforts to shed weight, though, can be very discouraging for many, leading to a vicious cycle of depression and over-eating once again. To tackle that problem, Orexigen (Nasdaq: OREX) has developed Contrave, which lessens symptoms of depression and improves eating control.

Orexigen is up sharply on Monday morning after the company released strong data from its clinical trials at this weekend’s annual meeting of the American Diabetes Association in Orlando, Fla. The drug led to moderate weight loss (5%) over the course of the year, but also lowered blood glucose levels. The company hopes to secure final FDA approval late this year, and begin product sales next year.

Action to Take –>This is a potentially large market, but is also being pursued by larger rivals such as Arena Pharmaceuticals (Nasdaq: ARNA), and Vivus (Nasdaq: VVUS), both of which are showing promising clinical data as well. Yet the market for obesity and diabetes is so vast that this niche industry could yield several winners. Even though shares of Orexigen are up nicely on Monday, they trade for less than half of the 52-week high. Further research is warranted here.

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PolyMet’s Rebound

Did you know that one of the largest undeveloped deposits of copper and nickel resides right here in the United States? The mineral belt, centered near Duluth, Minn., is vast, but also near many sensitive bodies of water. So any decision to mine the area has been a slow process.

The U.S. Environmental Protection Agency (EPA) has been taking applications, and has been slow to approve them. The regulatory body expressed major concerns with an application from a first-mover in the region, PolyMet Mining (AMEX: PLM). Once it looked as if PolyMet would not be able mine nickel and copper in the area, shares moved into freefall, from $3.75 in late January to just $1.31 last Thursday. But Friday morning, long-suffering investors got good news. The company’s plan modifications have found favor, and the application process is once again moving forward. Shares rebounded +18% on Friday, and are up another +14% today.

Action to Take –> Despite the sharp rebound, shares are still well below levels seen this past winter. It’s unclear how long the EPA process will take to complete, and if it will ultimately lead to a full mining permit. But the reward just got much better than the risk in this stock. For speculative investors, this could prove to be very rewarding.